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Augmented reality apps market could blossom to $300M in 2013

Taylor Swift is using augmented reality as a key feature in her mobile app, and according to recent research report, she's not alone.

A Juniper Research report said augmented reality (AR) applications, which usually involve scanning an image with a smartphone to access multimedia content, will generate close to $300 million next year, with paid downloads accounting for most of the revenues. This is up from $82 million this year.

Juniper: Combining revenues from paid downloads, post-download items and advertising, the total market for mobile AR will reach $5.2B in 2017, up from $82M in 2012.

Swift's most recent album is a good example. By scanning a still image, the singer's record company has created an AR mobile app that will immediately launch videos in which she describes the background to various songs. Other recent high-profile examples of AR mobile apps include an app to create a more interactive experience with the Guinness Book of World Records and a new game called Ingress from Google's (NASDAQ:GOOG) Niantic Labs.

"Many retailers now perceive AR as a key means of increasing engagement with consumers, both as a means of providing additional product information or in the form of branded virtual games and activities," the report said. "More than 2.5 billion AR apps [are] to be downloaded to smartphones and tablets per annum by 2017, with games accounting for the largest share of downloads."

Besides its obvious appeal to marketers and retailers, AR opens up potential new areas of opportunity for developers such as wearable computers like Google Glasses or tie-ins with popular movies, TV shows and books.

According to Juniper, the biggest challenge for mobile developers that want a piece of the AR market is easing the learning curve among consumers. But lack of awareness is just one of many challenges. Unless every piece of the smartphone is of sufficient quality to exploit the technology, the result can be a disappointing experience for early adopters.

Many obstacles stand in the way of mobile AR gaining considerable traction.

"Technological limitations of AR-enablers such as the phone camera, GPS, digital compasses and markerless tracking meant that in many cases, the AR experience was failing to live up to consumer expectations," Juniper said. "Even some higher-end smartphone cameras lacked sufficient sensitivity to trigger an AR experience unless light conditions were optimal."

The future for AR apps is bright, in other words, but only if the image being scanned by a smartphone is even brighter.